RBI might’ve barred the banks from dealing with cryptocurrency exchanges, but the story is far from over. Crypto exchanges and trading community both have shown that they’re not going to be pulled down by the government so easily. We have seen the online petition against RBI’s directives and the kind of overwhelming support it got (42,800+ signatures so far), and now one exchange has also challenged the legal basis of RBI’s directive in court.
That’s right – Kali Digital Eco-System, an Ahmedabad based company which was going to launch cryptocurrency exchange CoinRecoil, has filed a writ petition against RBI’s latest directive in Delhi High Court. The petition says that RBI’s order asking Indian banks to suspend their dealings with crypto exchanges is “unconstitutional” as it violates two important articles of Indian constitution:
- Article 19 (1) (g), which allows the citizens to carry out any occupation, trade or business;
- And Article 14, which prohibits discrimination between equals.
RBI, Finance Ministry and GST Council have been made the respondents to this petition. Though the decision was done by RBI and Finance Ministry, GST Council has also been made a party because it didn’t frame any taxation guidelines for crypto exchanges in a timely manner. A copy of petition was seen by Economic Times, which said:
“On account of the impugned circular, the petitioner will not be able to avail banking services to operate the cryptocurrency exchange ‘CoinRecoil’. Such banking services are imperative for the business of the petitioner. Consequently, the business… is stillborn.”
Kali Digital didn’t respond to media queries because the matter is sub judice. Some lawyers are also suggesting that RBI’s order also violates Article 301 of Indian constitution, which guarantees freedom of trade and commerce across India. By barring the banks to deal with a certain group of companies without banning the business of those companies first RBI is clearly crossing a line that should not have been crossed. If government wanted to ban Indian banks from dealing with crypto exchanges, it would have banned the cryptocurrencies first, which has obviously not been done. Therefore, RBI’s order seems to be contravening Article 301.
Writ petition is filed against any government officer or body when that particular officer/body fails to comply with their constitutional duty. In response of a writ petition if court feels the need it can order the concerned body/official to comply with law.
It will be interesting to see how RBI and government justify their move now when the legal base of their decision has been challenged.